WASHINGTON – The CEO of a major pharmaceutical company is warning that America’s health care system is a financial “bubble” that is heading toward collapse.
Heather Bresch, the CEO of Mylan (NYSE: MYL), the manufacturer of EpiPens, made the comments to CNBC as her company faced allegations of price gouging.
“Our health care is in a crisis,” she said. “It’s no different than the mortgage-financial crisis back in 2007. This bubble is going to burst.”
Bresch noted that with any other product – say, something bought at the grocery store — the consumer knows the price before walking up to the counter.
“Only in health care” does the consumer not know, said Bresch, who added that everything in health care, including deductibles, has skyrocketed.
Bresch blamed insurance companies, pharmacies and retailers for jacking up the price. She said the price for the EpiPen would be a lot lower if her company were allowed to sell the product directly to the public, but it is banned from doing that under current law. The EpiPen is also more expensive because it touches several hands before it reaches the pharmacy, she said.
The government and health insurance companies, and not manufacturers, are responsible for the high cost of some life-saving drugs, Bresch said.
‘System Wasn’t Built for That’
“The patient is paying twice,” Bresch said during the Thursday interview. “They’re paying full retail price at the counter, and they’re paying higher premiums on their insurance. It was never intended that a consumer, that the patients would be paying list price, never. The system wasn’t built for that.”
The price of an EpiPen in the United States rose from $100 in 2009 to $600 this year for a two pack. CNBC charged it only cost Mylan a few dollars to make an EpiPen.
“My frustration is there’s a list price of $608,” Bresch added. “What Mylan takes from that, our net sales is $274, so $137 per pen.”
The EpiPen is used to treat potentially life-threatening allergic reactions. Many patients would die without it, and so they have to carry one all the time.
Bresch also charged that the high price of EpiPens in the USA is subsidizing lower prices in Europe. Europeans pay between $100 and $150 a piece for an EpiPen because of rigid price controls set by their national insurance systems.
“We do subsidize the rest of the world … and as a country we’ve made a conscious decision to do that,” Bresch said. “And I think the world’s a better place for it.”
On Monday, Mylan announced it would begin selling a generic two-pack version for $300.
But Is it the Government’s Fault?
The real culprit for the high prices is the Food and Drug Administration (FDA), Reason.com writer Scott Shackford claimed, noting that there currently are few competitors.
“It would be more accurate to say that the company is taking advantage of the fact that the federal government’s own regulatory scheme has given them a medical monopoly,” Shackford wrote.
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